Maine considers student loan tax credit expansion

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AUGUSTA, Maine — A measure moving forward in the Maine Legislature would provide tax credits for student loans to some who graduate from out-of-state colleges and return to Maine, in a continued effort to encourage more young people to work and live in the state.

The Democrat-controlled House and Senate will soon consider for final passage the bill expanding the Educational Opportunity Tax Credit, which currently reimburses student loan payments for students who go to Maine community colleges and universities and stay in the state after graduation. The credit is aimed at stemming brain drain, but is underutilized by Maine graduates, supporters of the bill say.

Under the bill, students could qualify for the tax credit if they go to school in another New England state because the major they want to pursue is not offered in Maine, said its sponsor, Representative Catherine Nadeau, a Democrat. It is aimed at students who participate in the New England Regional Student Program, which gives tuition discounts to students for out-of-state New England colleges and universities.

State Representative Justin Chenette, Maine’s youngest lawmaker, said that he would like to extend the tax credit to all out-of-state graduates, but that this is a good start.

‘‘Ultimately every kid that leaves the state to go to school, we should be saying, ‘We want you to come back here, to apply the knowledge you’ve learned elsewhere,’ ’’ he said.

Advocates have criticized lawmakers for failing to fund a marketing initiative for the program, which has caused few students to take advantage of it. In 2012, 1,157 graduates received the credit, according to Maine Revenue Services, which is up from about 710 the year before but nowhere near the thousands of students that supporters had hoped would use it.

With a tax credit, a student who graduated from a state university, college, or community college in 2013 and stayed in Maine can claim up to $4,272 per year to reduce the amount they owe the state in taxes.